Dec 2015 APE sales: Private players further gain market share January 21, 2016 Nitin Kumar nitinkumar@plindia.com +91 22 66322236 Pritesh Bumb priteshbumb@plindia.com +91 22 66322232 India life insurance: APE new business premium and growth (%) Dec 2015 60 50 APE Dec'15 (Rs bn) YoY gr. (RHS) 4% 2% New business (APE) growth declines 3% YoY during Dec 2015: New business collection for the industry in APE terms declined by 3% YoY during Dec 2015. LIC s new business sales grew 2% YoY while private players reported a decline of 7% YoY (6% YoY growth in Nov 2015). On YTD basis, new business collection has grown at 6.6% YoY led by 13% YoY growth for private players while LIC reported a flattish trend (1% YoY growth) in new business sales during FY16 YTD. On MoM basis the industry reported a growth of 41% MoM led by 58% MoM growth for private players vs 26% MoM growth for LIC. Private players focus on Individual APE; LIC reports 12% growth in Group APE: Overall group business APE declined by 22% YoY impacted by 55% YoY decline for private players though LIC reported 12% YoY growth in the segment. With in more profitable individual segment private players reported 8% YoY growth vs 1% YoY decline for LIC. Amongst private players Tata AIA, SBI Life, Kotak Mahindra Life and Exide Life reported better trends in the individual segment. Month on month trends for individual business appeared better with the segment showing a growth of 44% MoM. Sector Update 40 30 20 10 0% 2% 4% 6% LIC s reliance on single premium remains high: The composition of single premium in total premium income has increased significantly over past one year to 56% (49% in Dec 2014) led by LIC for which single premium now accounts for 72% of total premium.. This contributed to decline in APE premium growth for LIC even as on un weighted basis LIC reported 25% YoY growth for Dec 2015. 8% Industry LIC Private LIC s market share declines by 549bp MoM to 47.5%: LIC s market share declined to 47.5% led by slowing trends in individual business APE. On YTD basis, LIC s market share has declined by 284bp to 51.5%. Among private players Kotak Life, ICICI Prulife, SBI Life and Tata AIA were the key gainers. Average premium per policy declines by 4% YoY; policy volume grows 1% YoY: The industry s average premium declined by 4% YoY, led by 14% YoY fall for private players vs 3% gain for LIC. Policy volume however increased by 1% YoY led by 9% YoY growth for private players. Private players now account for 26% of the total policy volumes vs 25% in Dec 2014. Exhibit 1: New business premium APE and YoY growth for key players 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 ICICI Prudential SBI Life HDFC Life Max Life Reliance Life APE Dec'15 (Rs bn) Birla Sunlife YoY gr. (RHS) Bajaj Allianz Tata AIG Met Life Aviva Kotak Mahindra Life 350% 300% 250% 200% 150% 100% 50% 0% 50% 100% Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision. Please refer to important disclosures and disclaimers at the end of the report
Exhibit 2: Market share (APE) Dec 2015, sorted on FY16 YTD Life Insurer YoY chg. MoM chg. FY16 YTD YoY chg. FY15 LIC 47.5% 2.4% 5.5% 51.5% 2.8% 53.3% Total Private 52.5% 2.4% 5.5% 48.5% 2.8% 46.7% ICICI Prudential 8.9% 0.1% 0.1% 9.3% 0.6% 8.7% SBI Life 13.4% 3.0% 4.2% 8.4% 2.3% 6.6% HDFC Life 5.9% 0.8% 0.7% 6.0% 0.2% 5.9% Max Life 4.1% 0.3% 0.9% 3.5% 0.3% 3.7% Birla Sunlife 1.8% 3.4% 0.6% 3.3% 0.1% 3.6% Reliance Life 2.6% 1.9% 0.9% 3.0% 1.4% 3.7% Kotak Mah. Life 2.7% 0.8% 0.5% 2.6% 0.9% 2.1% Bajaj Allianz 2.3% 1.5% 1.0% 2.5% 0.5% 3.0% Met Life 2.2% 0.6% 0.6% 1.7% 0.3% 1.5% Star Union Daichi 0.8% 0.5% 0.4% 1.1% 0.0% 1.0% Tata AIG 1.6% 1.2% 0.4% 1.1% 0.6% 0.6% Exide 1.4% 0.7% 0.5% 1.0% 0.2% 0.8% Exhibit 3: Market share (APE) among private players Dec 2015, sorted on FY16 YTD Life Insurer YoY chg. MoM chg. FY16 YTD YoY chg. FY15 Total Private 100.0% 100.0% 100.0% ICICI Prudential 17.0% 0.5% 1.7% 19.1% 0% 18.6% SBI Life 25.5% 6.6% 6.0% 17.2% 4% 14.2% HDFC Life 11.3% 0.9% 2.8% 12.3% 0% 12.7% Max Life 7.8% 0.3% 0.9% 7.1% 1% 7.9% Birla Sunlife 3.4% 6.0% 1.7% 6.9% 1% 7.6% Reliance Life 4.9% 3.2% 1.2% 6.1% 3% 7.9% Kotak Mah. Old Mutual 5.1% 1.7% 0.5% 5.3% 2% 4.4% Bajaj Allianz 4.4% 2.5% 2.7% 5.2% 1% 6.5% Met Life 4.1% 1.3% 0.7% 3.5% 0% 3.2% Star Union Dai ichi 1.5% 0.8% 1.0% 2.3% 0% 2.2% Tata AIG 3.1% 2.3% 0.5% 2.2% 1% 1.2% Exide 2.6% 1.4% 0.7% 2.1% 0% 1.8% Shriram Life 1.6% 0.5% 0.2% 1.6% 1% 1.2% January 21, 2016 2
Exhibit 4: New business sales (APE, Rs. mn) and growth, sorted on FY16 YTD Life Insurer YoY growth MoM growth FY16 YTD YoY growth FY15 YoY growth Industry Total 54,601 3% 41% 372,957 6.6% 535,923 51.5% LIC 25,920 2% 26% 192,077 1.0% 285,564 21.3% Total Private 28,681 7% 58% 180,880 13.2% 250,359 111.4% ICICI Prudential 4,874 4.1% 42.9% 34,633 13.3% 46,503 178.5% SBI Life 7,310 25.7% 105.7% 31,179 46.4% 35,495 100.0% HDFC Life 3,240 13.8% 26.1% 22,226 10.7% 31,854 152.7% Max Life 2,243 10.4% 78.6% 12,928 1.3% 19,896 90.9% Birla Sunlife 968 66.5% 5.6% 12,416 3.1% 19,041 91.2% Reliance Life 1,404 44.0% 111.3% 11,113 26.7% 19,809 86.8% Kotak Mah. Old Mutual 1,450 41.5% 74.8% 9,532 68.2% 11,093 111.5% Bajaj Allianz 1,266 41.1% 6.9% 9,422 11.7% 16,211 91.6% Met Life 1,179 35.1% 90.3% 6,340 26.5% 8,120 130.5% Star Union Dai ichi 444 37.5% 3.9% 4,181 9.5% 5,596 139.1% Tata AIG 883 289.3% 85.4% 3,974 159.3% 2,968 49.0% Exide 750 92.7% 115.7% 3,731 27.9% 4,511 63.6% Shriram Life 468 33.5% 43.3% 2,910 66.6% 2,994 133.2% Canara HSBC OBC 357 31.0% 54.4% 2,717 17.5% 3,504 9.9% Bharti Axa Life 438 19.6% 50.9% 2,499 4.4% 3,637 125.4% IDBI Federal Life 390 4.5% 91.1% 2,239 14.4% 2,803 66.7% Aviva 167 52.9% 223.6% 2,004 40.8% 5,473 48.9% IndiaFirst 260 25.5% 80.7% 1,921 8.7% 2,940 51.1% DLF Pramerica 204 22.5% 3.5% 1,760 18.7% 2,179 251.2% Future Generali 140 56.0% 22.9% 1,436 22.7% 2,467 185.2% Aegon Religare 101 45.2% 16.5% 858 19.7% 2,064 196.0% Edelweiss Tokio 126 50.0% 0.0% 777 30.2% 1,072 186.3% Sahara Life 17 57.3% 142.3% 83 1.7% 130 9.3% January 21, 2016 3
Exhibit 5: New business sales (Unweighted, Rs. mn) and growth, sorted on FY16 YTD Life Insurer YoY growth MoM growth FY16 YTD FY15 YTD growth Total Private 37,031 88.8% 56.2% 259,603 348,353 17.4% LIC 73,237 32.9% 41.3% 596,154 783,027 15.4% Industry Total 110,268 47.5% 46.0% 855,757 1,131,379 32.8% ICICI Prudential 5,593 120.2% 44.5% 47,635 53,334 32.8% SBI Life 9,629 276.4% 111.5% 45,239 55,281 34.6% HDFC Life 4,606 101.5% 18.4% 38,892 54,932 13.1% Max Life 3,062 89.4% 72.4% 17,605 25,726 4.0% Bajaj Allianz 1,917 4.9% 12.7% 16,718 27,020 6.1% Kotak Mah. O M 1,888 99.7% 48.5% 12,885 15,402 48.9% Birla Sunlife 1,000 5.1% 6.2% 12,708 19,415 3.2% Reliance Life 1,449 28.5% 103.5% 11,863 20,697 24.6% India First 787 37.5% 90.0% 9,536 15,387 9.4% Met Life 1,225 149.1% 89.0% 6,584 8,266 29.0% Star Union Dai ichi 485 70.7% 3.3% 4,936 6,299 15.2% DLF Pramerica 654 917.1% 22.8% 4,923 5,774 27.5% Exhibit 6: Total Individual business (Rs. mn) and growth, sorted on FY16 YTD Life Insurer YoY growth MoM growth FY16 YTD FY15 YTD growth Total Private 25,426 300.4% 61.4% 142,503 199,916 13.4% LIC 18,320 57.3% 25.9% 132,869 207,739 3.7% Industry Total 43,746 143.1% 44.4% 275,371 407,655 4.5% ICICI Prudential 4,845 634.6% 42.9% 33,437 45,956 11.1% SBI Life 6,960 1109.7% 108.0% 26,891 31,203 42.5% HDFC Standard 3,115 259.1% 27.5% 20,606 29,675 10.2% Max Life 2,203 148.6% 80.1% 12,553 19,483 2.0% Reliance Life 881 12.6% 55.1% 6,063 12,024 26.1% Met Life 1,125 176.7% 90.9% 5,961 7,124 35.8% Kotak Mah. Old Mutual 1,026 796.5% 85.0% 5,423 6,170 74.1% Birla Sunlife 677 61.3% 51.3% 4,056 7,382 14.5% Bajaj Allianz 723 155.8% 44.9% 4,019 7,755 15.7% Exide 470 245.0% 38.9% 3,133 4,407 9.0% Tata AIG 678 256.7% 63.8% 3,090 2,340 166.9% Canara HSBC OBC 335 49.1% 52.7% 2,529 3,272 16.8% January 21, 2016 4
Exhibit 7: Total Group business (Rs. mn) and growth, sorted on FY16 YTD Life Insurer YoY growth MoM growth FY16 YTD FY15 YTD growth Total Private 3,255 49.6% 32.9% 38,378 50,443 12.5% LIC 7,600 27.0% 27.8% 59,208 77,825 13.3% Industry Total 10,855 12.7% 29.3% 97,586 128,268 12.9% Birla Sunlife 291 78.8% 38.0% 8,360 11,659 14.4% Bajaj Allianz 543 10.2% 31.7% 5,403 8,456 8.4% Reliance Life 523 79.1% 442.8% 5,050 7,786 27.5% SBI Life 350 21.4% 68.7% 4,288 4,292 76.5% Kotak Mah. Old Mutual 424 13.9% 54.2% 4,109 4,923 61.0% Star Union Dai ichi 51 35.9% 180.6% 1,907 1,572 34.7% HDFC Life 126 49.1% 1.5% 1,619 2,179 18.0% ICICI Prudential 29 82.2% 41.2% 1,197 547 155.4% Aviva 90 8.8% 1845.9% 945 2,490 41.8% Tata AIG 205 114.0% 229.1% 884 628 136.0% India First 58 58.4% 101.0% 829 1,340 13.0% Future Generali 14 81.8% 85.3% 762 1,141 57.3% DLF Pramerica 47 31.1% 39.5% 652 783 23.0% Exhibit 8: APE (Rs. mn) and Market share APE, Rs mn YoY gr. LIC 25,920 25,301 2% Private 28,681 30,857 7% Industry Total 54,601 56,158 3% LIC market share 47.5% 45.1% 2.4% Private market share 52.5% 54.9% 2.4% Exhibit 9: Policy volume and Premium per policy Policies sold ('000) Premium per policy (Rs.) Total Premiums (Rs m) FY16 YTD FY16 YTD LIC 1,895 12,601 13,679 15,243 25,920 YoY 1% 3% 2% LIC Share 74% 76% 47.5% Private 657 3,996 43,643 45,268 28,681 YoY 9% 14% 7% Private Share 26% 24% 52.5% January 21, 2016 5
Exhibit 10: Single premium as a proportion of Total un weighted premium, sorted on FY16 YTD Life Insurer FY16 YTD Grand Total 56% 63% LIC 72% 75% Total Private 25% 34% India First 74% 89% DLF Pramerica 76% 71% Sahara Life 76% 61% Bajaj Allianz 38% 48% HDFC Standard 33% 48% IDBI Federal Life 34% 47% Canara HSBC OBC 41% 42% Shriram Life 39% 38% SBI Life 27% 35% Bharti Axa Life 29% 34% ICICI Prudential 14% 30% Max Life 30% 30% Kotak Mah. Old Mutual 26% 29% Star Union Dai ichi 9% 17% Edelweiss Tokio 22% 16% Exide 4% 13% Reliance Life 3% 7% Met Life 4% 4% Tata AIG 1% 3% Birla Sunlife 4% 3% Aviva 2% 2% Future Generali 1% 2% Aegon Religare 1% 2% January 21, 2016 6
Exhibit 11: Individual premium as a proportion of total premium, sorted on FY16 YTD Life Insurer FY16 YTD Grand Total 80.1% 73.8% LIC 70.7% 69.2% Total Private 88.7% 78.8% Sahara Life 100.0% 100.0% Aegon Religare 100.0% 100.0% Max Life 98.2% 97.1% ICICI Prudential 99.4% 96.5% Bharti Axa Life 96.1% 95.2% IDBI Federal Life 97.8% 95.0% Met Life 95.4% 94.0% Canara HSBC OBC 93.7% 93.1% HDFC Standard 96.1% 92.7% Edelweiss Tokio 94.4% 88.9% SBI Life 95.2% 86.2% Exide 62.7% 84.0% Shriram Life 83.9% 82.2% Tata AIG 76.8% 77.8% DLF Pramerica 77.0% 63.0% Kotak Mah. Old Mutual 70.8% 56.9% IndiaFirst 77.8% 56.9% Reliance Life 62.7% 54.6% Star Union Dai ichi 88.5% 54.4% Aviva 46.2% 52.9% Future Generali 90.1% 46.9% Bajaj Allianz 57.1% 42.7% Birla Sunlife 69.9% 32.7% January 21, 2016 7
Exhibit 12: Private players / LIC trend in policy volumes Private players policies sold LIC policies sold 5 4 (m) 3 2 1 Exhibit 13: Private Players / LIC trend in value per policy Private Players value per policy (Rs) LIC value per policy (Rs) 60,000 50,000 40,000 30,000 20,000 10,000 Exhibit 14: Group premium as % of total premium APE 50.0% Group prem. as % of total private players Group prem. as % of total Industry Group prem. as % of total LIC 40.0% 30.0% 20.0% 10.0% 0.0% Apr 14 January 21, 2016 8
Exhibit 15: Trend in composition of group and individual premium 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Group prem. as % of total Individual prem. as % of total Apr 14 Exhibit 16: Single premium as % of total un weighted premium trend 100% Single prem. as % of total unwtd. Prem. Private players Single prem. as % of total unweighted prem. LIC Single prem. as % of total unweighted prem. Industry 80% 60% 40% 20% 0% Apr 14 Exhibit 17: Market share trend between private players and LIC LIC Private 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Apr 14 January 21, 2016 9
Exhibit 18: Trend in APE premium growth Private Players LIC Industry 100% 80% 60% 40% 20% 0% 20% 40% Exhibit 19: Trend in total individual non single premium and % share of LIC Individual Non single premium (Rs bn) % share of LIC (RHS) 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% 35.0% 30.0% Exhibit 20: Trend of Individual non single premium as % of total industry APE Total Industry APE (Rs bn) % share of Individual Non single premium (RHS) 120.0 100.0 80.0 60.0 40.0 20.0 Apr 14 100% 80% 60% 40% 20% 0% January 21, 2016 10
Exhibit 21: Trend in total individual APE as % of total APE Individual Premiums (Rs bn) % share of individual premiums (RHS) 80 70 60 50 40 30 20 10 Apr 14 90% 80% 70% 60% 50% 40% Exhibit 22: Quarterly APE contribution to full year new business sales 40% LIC Private Total 35% 30% 25% 20% 15% 10% 1Q FY13 2Q FY13 3Q FY13 4Q FY13 1Q FY15 2Q FY15 3Q FY15 4Q FY15 January 21, 2016 11
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